What Tim Geithner's Tax Problem Tells Us

Wed, 14 Jan 2009 15:41:59 +0000 – I find myself agreeing with Harry Reid on this one that Tim Geithner's nonpayment of his Social Security and Medicare taxeswhile he worked at the IMF should not derail his nomination. It sounds like an honest mistake and not a real effort to avoid paying taxes. He paid them up and paid the fine and that's that. Of course, it's an embarrassment that the guy tasked with rescuing our economy didn't understand his own tax obligations.

But embarrassment shouldn't be disqualifying. It is time we got beyond the idea that anyone confirmed to work in the Executive Branch has to have been lily pure in order to be confirmed. Otherwise, we'll soon run out of qualified people to serve in our government.

Perhaps this is an indication that our tax code is just too complicated if even the highest ranking officials in the country can't figure out what they need to pay.

They could pay attention to a recommendation from Sam Dealey at U.S. Newsthat the tax code is not only too complicated but is interfering with our national productivity. Citing statistics from the Nina Olson, the national taxpayer advocate at the IRS, he points out that:

* Americans spend 7.6 billion hours annually trying to figure out their federal taxes. Working eight-hour days, five days a week, 50 weeks a year, that's the equivalent of 3.8 million full-time workers. * At the average hourly wage of $27.54, that tax-preparation time amounts to $193 billion, or 14 percent of aggregate income tax receipts. * A staggering 60 percent of individual taxpayers are so bewildered by the tax code that they hire outside preparers. An additional 22 percent buy computer software.

The bottom line: Paring the tax code's 3.7 million words to something comprehensible would effectively return money to the taxpayer at no "cost" to the government. Individual taxpayers could do something else with their time, the small-business owner could concentrate on creating income, and the IRS (and, consequently, the taxpayer again) could spend less money on compliance and enforcement. Heck, taken all together, tax receipts from a simplified tax system might actually rise.